(1) The following forms are to be completed and filed in accordance with instructions provided by the department:

(a) Form RW-1, Mineral Royalty Withholding Payment Voucher, must be filed quarterly unless the department establishes that the entity is exempt from the withholding requirements of 15-30-2538, MCA. A remitter may request to file a Form RW-1 on an accelerated basis. The remitter must receive approval from the department before remitting the withholding tax on a more frequent basis than quarterly;

(b) A remitter who has no withholding to remit for a remittance period shall, on or before the due date, send a payment voucher showing that a zero amount is being remitted;

(c) Form RW-3, Montana Annual Mineral Royalty Withholding Tax Reconciliation, must be filed on or before January 31 of each year. Form RW-3 must be accompanied by copies of each royalty owner's withholding statements on federal form 1099-MISC, Miscellaneous Income, or Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding;

(d) On or before January 31 of each year, Form 1099-MISC, Miscellaneous Income, or Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, shall be furnished by the remitter to each person who has received royalties in each calendar year;

(e) Each remitter that is exempt from withholding is still required to file the Form RW-3 with the department along with a copy of Form 1099-MISC, Miscellaneous Income, or Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, for every recipient of royalties. These reports are due on or before January 31 of each year; and

(f) A substitute for Form 1099-MISC may be filed with the department provided it:

(i) generally follows the guidelines in federal Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns; and

(ii) reports all the information regarding Montana royalty payments as required in 15-30-2543, MCA, and the rules in this subchapter.

(2) Electronic filing requirements for state purposes are the same as those mandated for federal purposes.

(3) If a remitter does not withhold on a royalty interest owner who in the previous year met the exemption requirement in 15-30-2539, MCA, but exceeded that requirement in the current year, the department will not penalize the remitter for the lack of withholding in that current year.